Category: Real Estate

Home Buying In A Competitive Market

Maui real estate
With so few houses for sale today and low mortgage rates driving buyer activity, bidding wars are becoming more common. Multiple-offer scenarios are heating up, so it’s important to get pre-approved before you start your search. This way, you can put your best foot forward – quickly and efficiently – if you’re planning to buy a home in Maui.

Get Prepared

A recent survey shows that only 52% of active homebuyers obtained a pre-approval letter before they began their home search. That means about half of active buyers missed out on this key part of the process. Buyers who are pre-approved are definitely a step ahead when it’s time to make an offer. Having a pre-approval letter indicating you’re a qualified buyer shows sellers you’re serious. It’s often a deciding factor that can tip the scale in your direction if there’s more than one offer on a home.

Don’t Lowball

In a highly competitive market, it’s common for sellers to pick a date and time to review all offers on a house at one time. If this is the case, you may not have an opportunity to negotiate back and forth with the sellers. As a matter of fact, the National Association of Realtors (NAR) notes: “Not only are properties selling quickly, but they are also getting more offers. On average, REALTORS® reported nearly three offers per sold property in July 2020.” Make sure the offer you’re presenting is the best one the sellers receive.

Be Quick

With existing homes going like hotcakes, there’s no time to waste in the process. NAR reports how the speed of home sales is ramping up: “Properties typically remained on the market for 22 days in July, seasonally down from 24 days in June and from 29 days in July 2019. Sixty-eight percent of homes sold in July 2020 were on the market for less than a month.” As you can see, the market is gaining steam. You may not have time to sleep on it or shop around when you find a home you love. Chances are, someone else loves it too. If you take your time, it may not be available when you’re ready to commit.

Existing Home or New Construction?

Maui real estate
Finding the perfect Maui home to purchase is one of the biggest challenges for potential buyers. With so few homes for sale and construction of newly built homes ramping up, you may be wondering if you should consider new construction in your search process. It’s a great question to ask, and one to look at from the pros and cons of what it means to buy a new home versus an existing one. Here are a few things to consider when making the best decision for your family.

New Construction in Maui

When buying a new home in Maui, you can often choose more energy-efficient options. New appliances, new windows, a new roof, etc. These can all help lower your energy costs, which can add up to significant savings over time.

Lower maintenance that comes with a newer home is another great benefit. When you have a new home, you likely won’t have as many little repairs to tackle, like leaky faucets, shutters to paint, and other odd jobs around the house. With new construction, you’ll also have warranty options that may cover portions of your investment for the first few years.

Another solid benefit to new construction is customization. Do you want a mudroom, stainless steel appliances, granite countertops, hardwood floors, an office, or a multipurpose room to homeschool your children? These items can be customized to your specific needs during the design phase. With an existing home, you’re buying something that’s already completed, so if you want to make changes, you may need to hire a contractor to perform the work.

Existing Home in Maui

When buying an existing home in Maui, you can negotiate with the current homeowner on price, which is something you generally don’t get to do with a builder. Builders know their material and construction costs, and they have a price set for the model you’re buying. So, if you want to negotiate, then maybe an existing home will be best.

For many families, having an established neighborhood is also important. Some buyers like to know the neighbors, if it’s family-friendly, and traffic patterns before making a commitment. When you buy new construction, you won’t have a full view of some of those details until the lots around you are sold.

Finally, timing comes into play. With an existing home, you can move in based on the timeline you agree to with the sellers. With new construction, you need to wait for the house to be built. Depending on the time of the year you’re buying and the region you’re in, the weather can also be a factor in the timeframe. This is something really important to keep in mind, especially if you need to move sooner rather than later.

Why Getting Pre-Approved Is So Important

Maui mortgage approval
Getting a pre-approval from a mortgage lender in Maui is a great first step in the homebuying process. When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range, what you’re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. According to a recent survey from realtor.com, many buyers are making the mistake of skipping the pre-approval step in the homebuying process:

“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.”

The pre-approval letter shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current ultra-competitive market.

With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. According to the National Association of Realtors (NAR), homes are receiving an average of 2.9 offers for sellers to negotiate, so bidding wars are heating up.

Pre-approval shows Maui homeowners you’re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it’s likely. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.

In addition, today’s housing market is also changing from moment to moment. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals (loan officer and real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a Maui home to purchase.

Are You Considering Moving?

Maui real estate
How long have you lived in your current Maui home? If it’s been a while, you may be thinking about moving. According to a recent study by the National Association of Realtors (NAR), in 2019, homeowners were living in their homes for an average of 10 years. That’s a long time to be in one place, considering the average length of time homeowners used to stay put hovered closer to 6 years.

With today’s changing homebuyer needs, especially given how the current health crisis has altered our daily lifestyles, many homeowners are reconsidering where they’re at and thinking about moving to a home with more space for their families.

The real estate market has changed in many ways over the past 10 years, and current homeowners are earning much more equity today than they used to have. According to CoreLogic, in the first quarter of 2020 alone, the average homeowner gained approximately $9,600 in equity. If you’re considering selling your house right now, you may have accumulated more equity to put toward a move than you realize.

Dialing back 10 years, many homeowners also locked in a fairly low mortgage rate. In 2010, the average rate was only 4.09%. This motivated homeowners to stay in their houses longer than usual to keep their rate low, rather than moving. Just last Thursday, however, average mortgage rates hit a new historic low at 2.86%. Sam Khater, Chief Economist at Freddie Mac explains: “Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity, which is up twenty-five percent from a year ago and has been growing at double digit rates for four consecutive months.”

Ten years ago, you probably wouldn’t have imagined a mortgage rate under 3%. Depending on your current mortgage scenario, making a move into a new home and locking in a significantly lower rate than you have now could save you greatly on a monthly basis, and over the life of your loan.

As a homeowner in Maui, you have a huge opportunity to move up right now. Whether you want to save more each month or get more home for your money based on your family’s changing needs, it’s a great time to reach out to a local real estate professional in your area. Buyers are actively looking for more homes to buy, and you can win big by making a move if the time is right for you.

Home Sales and Median Price both hit records in July

Maui real estate
Existing-home sales jumped 25% in July from June, beating the prior record gain of 21% set a month earlier, as low mortgage rates fueled demand for real estate across the United States.

Sales of single-family homes, townhomes, condominiums, and co-ops rose to a seasonally adjusted 5.86 million, the highest level since 2006, the National Association of Realtors said in a recent report. The median price increased 8.5% from a year ago to $304,100, breaking through the $300,000 threshold for the first time.

“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

The average U.S. rate for a 30-year fixed mortgage fell to a record low of 2.88% in the first week of August, the eighth time in 2020 the weekly rate has set a record in a Freddie Mac series that goes back almost five decades. Lenders qualify applicants by the amount of the monthly payment measured against their income, and when financing costs go down the payment shrinks. That also means borrowers often find they qualify for larger mortgages, which means they can pay more for a property they want.

Properties remained on the market for an average of 22 days in July, down from 29 days in July 2019, the NAR report said. About 68% of homes sold in July 2020 were on the market for less than a month.

The low mortgage rates are pulling more first-time buyers into the market, Yun said. About 34% of sales in July were to people who were purchasing their first homes, he said. That’s up from 32% a year ago.

Steps You Can Take To Prepare For Buying A Home In Maui

Maui real estate
With national inventory down almost 30%, the Maui housing market has become more competitive. That’s especially true when it comes to mid-priced, affordable houses. So how do you get ahead in a hot market? The key is preparation. The sooner you start preparing to buy a house, the easier it’ll be to beat the competition. But even if you’re already house hunting, it’s not too late to take some of these steps and improve your Maui homebuying prospects.

Check your credit

Once you decide to buy a home, the first thing you’ll need to do is check your credit. This involves getting your credit report from each of the three bureaus (Experian, TransUnion, and Equifax), and pulling your credit score. Your credit determines whether you’re eligible for a mortgage, and it influences your mortgage rate. The higher your score, the lower your rate. Ideally, you should check your credit at least six to 12 months before applying for a mortgage. This allows time to improve a low personal score, if necessary. To get your credit file, contact each of the three bureaus separately, or order all three copies from AnnualCreditReport.com. Each year you’re entitled to one free report from each of the bureaus.

Figure out your DTI

Your debt-to-income (DTI) ratio is the percent of your monthly gross income that goes toward debt repayment. Mortgage lenders use this percentage to gauge affordability. Generally speaking, lenders prefer a DTI ratio that’s no higher than 36% to 43%, depending on the mortgage program.

For example:

  • If you have a gross monthly income of $5,000
  • Your monthly debt payments (including a future mortgage payment) shouldn’t exceed $2,150
  • Your DTI is 43% ($2,150 / $5,000 = 0.43)

To improve your DTI ratio, pay off as much debt as possible before applying for a mortgage. This includes credit cards, auto loans, student loans, and other loans. You don’t have to be debt-free to purchase a home, but less debt can increase purchasing power.

Save money

Today, the majority of mortgage programs require a down payment. This amount ranges from a minimum 3% to 5% for a conventional loan, and a minimum 3.5% for an FHA home loan. So if you pay $200,000 for a house, you’ll need at least $6,000 to $10,000 as a down payment. Keep in mind, too, if you purchase with less than a 20% down payment, you’ll likely pay mortgage insurance. This insurance protects your lender in the event of default. Some mortgage programs allow borrowers to use gift funds to cover all or a percentage of their mortgage-related expenses. There are also multiple down payment assistance programs (DPAs) in every state. These offer grants or loans — sometimes forgivable loans — to qualified homebuyers who need help with their down payments.

Coronavirus Real Estate Myths

Maui real estate
Some Americans may be under the impression that high unemployment rates and recession are prompting a gloomy housing picture. They’re wrong. Realtor.com® highlights a few common COVID-19-related myths that may need some debunking.

It’s a bad time to sell a home.

After all, homeowners may be skittish with unemployment so high and a pandemic raging on. How could it possibly be a good time to sell?

The reality is, buyers are frantically wanting a place to call home, but many homeowners are choosing not to sell. New-home listings plunged 14% in early July compared to a year ago. The total inventory is 32% lower year over year, according to realtor.com®’s Weekly Housing Trends report for July 11.

“Given the pandemic and uncertainty it’s caused, the general sentiment [among some owners] is that now is not a good time to sell your home,” says Danielle Hale, realtor.com®’s chief economist. “Yet so far, the data suggests the opposite—that buyers outnumber sellers in the housing market, which means it’s better to be a seller than a buyer.”

Home buyers eager to purchase are sparking bidding wars as they compete for limited inventory. “Multiple offers could be fairly common over the next few months,” says Lawrence Yun, NAR’s chief economist.

Home prices are dropping.

Home prices are actually rising. During the first quarter of 2020, the national median price for single-family homes increased by 7.7% to $274,600. “We’re seeing home prices grow faster than pre-COVID-19,” Hale says. “In fact, they are on pace with the home price growth we saw this time last year.”

Record low mortgage rates boost buying power, Yun adds. “And when combined with a lack of supply will result in higher and higher home prices,” he says.

Everyone is rushing to the suburbs.

Urban centers certainly pose more challenges for social distancing during a pandemic than less densely populated areas. Overall, listings in the suburbs are showing higher interest nationwide. In May, the number of views on properties in suburban ZIP codes rose 13%—nearly double the views that listings in urban areas received, according to realtor.com® research.

“We have seen homebuying demand recover faster in the suburbs and rural areas than urban areas,” Hale says. “There’s also evidence of home shoppers in cities that were hit early and hard by COVID-19, such as New York and Philadelphia, are seeking homes in nearby smaller communities at a higher pace, like the Poconos.”

That said, not everyone is leaving the city. This may be partially centered to the wealthy, who can afford to do so. Also, it’s not easy for everyone to pick up and move.

Shopping Tips For New Construction Homes

Maui new homes
Owning a newly-built home can be a source of immense pride and enjoyment. Having the chance to build a house to your specifications provides a great opportunity to move into a home that you can enjoy for many years.

As a potential buyer of a new home in Maui, there are some important things to keep in mind throughout the research and building process that will help make the process simpler. To help ensure you’re fully prepared, here are a few things that you should know about new construction homes:

There Are Lots of Options

It’s easy to miss when you walk through a completed home, but the number of options available when you’re constructing a new home is staggering. If you’re buying a home in a new development, you can simplify this decision-making process by choosing from certain pre-selected packages. Of course, you can choose each option individually, keeping in mind that this will take quite a bit of time and could result in an unexpected finished product if you don’t have a decent handle on interior design.

There’s Time Involved

New construction homes don’t just pop up overnight. Most new homes take a few months to build, meaning you need to have a plan for where you’ll live in the meantime. To be sure, the end result is more than worth the wait. It’s important, though, to keep in mind that the waiting period will likely be longer than if you buy a pre-existing home. To help maintain your excitement, you can drop by the building site on occasion to check out the construction progress.

Home Warranties Are Encouraged

There’s no doubt that Maui home builders work hard to produce the best homes they can. However, that doesn’t mean that a home warranty is not a smart idea, even when the home you’re protecting is brand new. If one of your appliances should turn out to be a lemon, for example, you don’t want to have to pay to replace it when you’re already working hard to pay down your mortgage. Before you move into your new home, it’s important to understand the warranties that are available to you so that you can take advantage of the options that are best for your situation.

It’s Good to Have a REALTOR®

Even when buying a new construction home straight from the developer, it’s a good idea to have a REALTOR® to represent you. A real estate professional can help make the paperwork process much easier and ensure that you’ve completed all the small details to make your transition into your new Maui home far smoother. Plus, a REALTOR® will ensure that you’re getting a fair price and you didn’t miss any details that could turn out to be problems later on.

Even when the completion of your home seems a long way off, the reality is that moving into a new construction home is usually worth all the effort involved. Knowing that you’re the first family to make memories in a home serves as a daily reminder of the hard work that has gotten you to this point. Plus, with the right planning in place, buying a new home can be as simple as buying any other home!

Article provided by Brooke Chaplan

What Real Estate Experts Think About the Rest of 2020

Maui real estate
One of the biggest questions on everyone’s minds these days is: What’s going to happen to the housing market in the second half of the year? Based on recent data on the economy, unemployment, real estate, and more, many economists are revising their forecasts for the remainder of 2020 – and the outlook is extremely encouraging. Here’s a look at what some experts have to say about key areas that will power the industry and the economy forward this year.

Mortgages: Joel Kan, Associate Vice President of Economic and Industry Forecasting, Mortgage Bankers Association

“The recovery in housing is happening faster than expected. We anticipated a drop off in Q3. But, we don’t think that’s the case anymore. We revised our Q3 numbers higher. Before, we predicted a 2 percent decline in purchase originations in 2020, now we think there will be 2 percent growth this year.”

Home Sales: Lawrence Yun, Chief Economist, National Association of Realtors

“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lock down and hence the cyclical low point…Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

Inventory: George Ratiu, Senior Economist, realtor.com

“We can project that the next few months will see a slow-yet-steady improvement in new inventory…we projected a stepped improvement for the May through August months, followed by a return to historical trend for the September through December time frame.”

Mortgage Rates: Freddie Mac

“Going forward, we forecast the 30-year fixed-rate mortgage to remain low, falling to a yearly average of 3.4% in 2020 and 3.2% in 2021.”

New Construction: Doug Duncan, Chief Economist, Fannie Mae

“The weaker-than-expected single-family starts number may be a matter of timing, as single-family permits jumped by a stronger 11.9 percent. In addition, the number of authorized single-family units not yet started rose 5.4 percent to the second-highest level since 2008. This suggests that a significant acceleration in new construction will likely occur.”

Reasons You Should Work With A Real Estate Agent

Maui real estate
Selling your Maui home without an agent is often an appealing idea because you can forego the commission rates. The major downside, however, is you lose out on all the important qualities and experience an agent has when they do the work themselves. Here are four reasons why selecting a reputable, local real estate professional is beneficial for sellers:

Negotiation Skills

Your local Maui real estate agent knows how to get the buyer to make the purchase as close to the asking price as possible. They do this work for a living, so agents understand the ins and outs of contract and price negotiations. Another factor is the market conditions—agents have to stay on top of changes, so they can make the most money on commissions. They know what items they can negotiate and what things are best to avoid.

No Emotional Connection

One of the biggest things about hiring a professional that sellers find appealing is the fact that an agent is not biased. They’re not connected to your property, so they see it at face value. Things like older home equipment, cracks in the sidewalk or areas that you can improve before the open house are more visible to the the agent than the person who has lived in the home for years. With no emotional connection, the agent can make decisions that many homeowners are afraid of or unwilling to make.

Accessibility

Does your schedule afford you the time to talk with every person interested in your home? Probably not. Additionally, agents must accommodate the schedules of prospective buyers and show them your Maui property when they’re available. If you go the For Sale by Owner (FSBO) route, then you must handle screening buyers and scheduling showing times yourself.

Legal Responsibility

One thing most people do not realize when they choose to go the FSBO route is that they’re legally responsible for anything they don’t disclose to the buyer. Even inadvertent omissions can cause you to incur a lawsuit. Breach of contract may occur when the owner accidentally forgets to mention something hazardous about the property.

Property agents and brokers have insurance that covers them if they miss something a buyer finds a nuisance or danger after signing a home contract. You have nothing to protect you should you miss something.

Agents spend a lot of time and money earning their real estate license. Knowing the local Maui market and laws is a necessary part of the business. If you’re not a legal professional, you could put yourself in danger of a lawsuit if you decide to sell your home on your own rather than hiring a professional to handle the process.

Article from: Meghan Belnap